6 Things All Buyers Should Know About Before Closing Day Arrives


Finding the perfect home and negotiating a deal that both parties can agree to is a huge accomplishment. But as stressful as that process is, waiting for closing day to arrive can be just as nerve-racking. Anything can happen from the time of offer acceptance to the day of closing, so it’s important to keep your head up and make sure you don’t do anything that could potentially sabotage the entire deal.

As a buyer, here are 6 things that you should know before the deal finally closes.

1. The Final Walk-Through Still Needs to Be Done

The home may have been in a certain condition when you last saw it, but things can change between then and the day of closing. Whether the sellers neglected the home or a natural disaster hit, anything can happen that could compromise the property.

Luckily, a final walk-through is a standard clause in the purchase contract in California. This will give you the opportunity to make sure all the major systems are working, no damage was done to any part of the home during escrow, the necessary agreed-upon repairs were made, and the seller has vacated the premises. If you do come upon an issue during the final walk-through, you’ll need to address it right away. 

2. Your Mortgage Still Needs to Be Approved

You may have been pre-approved for a mortgage, but the real approval process starts after you’ve signed a purchase agreement. Just because you’ve filled out and submitted a mortgage application and provided all the necessary documents to your lender doesn’t mean you’re automatically approved.

That’s the whole purpose of including a financing contingency in your real estate contract – this provides you with an opportunity to secure financing before closing so you’re not stuck with an extremely expensive asset that you can’t afford to pay without a home loan.

Many lenders will continue to verify credit, assets, and income right up until the last day of escrow. That’s why it’s important not to make any major purchases on credit (such as a new car), apply for a new credit card, or change jobs before you have solidified your mortgage approval. Don’t make any financial moves that could throw a wrench in your mortgage approval process.


2. You Could Be Stuck With a Higher Mortgage Rate Than Initially Quoted

You may be quoted a specific mortgage rate from your lender, but that number could change by the time the deal closes. That’s because mortgage interest rates fluctuate every day, and the rate that you’ve been quoted won’t stand forever. Your lender will lock in your mortgage rate for a certain amount of time, usually 30, 45, or 60 days.

However, after the lock expires, you’ll be given the most up-to-date rate. In some cases, it could be higher, and in others, it could be lower. It may even stay the same. The point is, it’s important to understand that there’s a possibility that you may be given a slightly different interest rate if the lock expires.

4. Title Needs to Be Successfully Cleared

Before title is transferred to you, it needs to be cleared first. There could be any number of issues with the title of the property you just agreed to buy. Perhaps there is a lien on title that the seller hasn’t taken care of yet, or maybe there is an additional person on title that needs to be part of the transaction that wasn’t initially included.

Usually, title clearance occurs without a hitch, but there may be instances where an issue is present that needs to be dealt with before the title can be transferred.


5. There Are Tons of Documents to Sign

When closing day finally arrives, be prepared to sign a lot of paperwork, including the deed, affidavit of title, transfer tax declarations, loan estimate, and closing disclosure. The actual closing can take place at the lender’s office or at the escrow company’s location. 

6. Post-Closing Agreements

You’ve successfully closed! At this point, you’re the rightful owner of the home and can move in. However, there may be some post-closing agreements that need to be fulfilled, such as specific repairs or property tax reimbursements.

There may also be seller rent backs to deal with if there was an agreement to allow the seller to rent the place before they move into their new home. This is a unique situation, but handling it is made easy thanks to the Purchase Agreement Addendum (PPA) that Californians have at their disposal to deal with situations like these. This addendum modifies the original purchase contract and deals with short-term seller rent backs that are less than 30 days.


The Bottom Line

Once you and the seller agree to all the terms of the purchase agreement, the work isn’t over yet. There are still plenty of things that need to be taken care of before closing day arrives. The good news is that your real estate agent will be there every step of the way to guide you through the process and make sure all steps are taken to ensure a successful transaction for all parties involved.